The recent infusion of more money – $2 billion to be exact – towards the “Cash for Clunkers” program has made both dealers and consumers excited about the prospect of trading in their gas-guzzlers for new vehicles.
However, dealers in Queens have had to find creative ways to complete these transactions, since the government has been slow to approve the trades.
As a result, dealers have found themselves either offering the rebate to car buyers out of their own pocket – either $3,500 or $4,500 worth – or putting the amount on the buyer’s credit card to charge later – just in case the government does not approve the sale.
“We trusted the government whole-heartedly when the program first came out because we were told that we would get paid within 10 days,” said Mark Harrington, the general manager of Koeppel Nissan on Northern Boulevard in Jackson Heights, who has accumulated 160 written deals between August 1 and August 10.
“My first transaction was on July 25 and we are still waiting, still ‘under review.-’,” he said.
Harrington said that though they have let buyers drive off with the new cars and the dealership has floated all the money, they are concerned because they don’t know if they’ve done things correctly.
“We’ve been told nothing and that’s the part that’s killing the dealer,” said Harrington, who has already filled his storage facility and the adjacent sidewalks with clunkers not wanting to destroy them until he’s received approvals. “The government was never prepared for this [volume].”
As of August 11, the Car Allowance Rebate System (CARS), also called the “Cash for Clunkers” program, has processed 273,077 trades totaling close to $1.15 billion, according to Patricia Swift-Oladeinde, a spokesperson with the National Highway Traffic Safety Administration (NHTSA), the program’s regulating agency.
“You can imagine the volume of transactions,” said Swift-Oladeinde, who added that they have to validate every aspect of the contract and approvals can take at least 10 days. “The dealers just need to be patient.”
And even if dealers continued to trade in the clunkers for new vehicles, Swift-Oladeinde assured that plenty of money remains to reimburse them.
“Dealers have a real-time ticker so they know how much money is there; how much is left; they know exactly,” she said.
Despite the wait for reimbursement, most dealers do like the program. Rich Provenzano, the general sales manager of Star Toyota, has charged consumers the rebate amount on their credit cards with the intent to reimburse them when the government pays them.
“Customers were okay with that,” Provenzano said.
In the meanwhile, just like Koeppel Nissan, Star Toyota has placed the clunkers in their storage facility – without destroying the engine – so that “just in case” they can give the car back.
The “cash for clunkers” program received an initial $1 billion when the federal government approved legislation on June 24 to incentivize the American public to trade in their “clunker” that is a car that gets under 18 miles-per-gallon and is still under 25 years old for a voucher worth between $3,500 and $4,500 towards the purchase of a new car.
The program – which officially went into effect on July 1, but did not build up steam until July 24, with the publication of the NHTSA regulations and the set-up of the computer tracking systems – almost ran out of money.
But the Senate allotted the $2 billion on Thursday, August 6 and President Obama signed the legislation into law the next Friday, extending the program until November 1, or until the funds had been exhausted.
